Future Income
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How is future income considered in an Offer in
Compromise process?
This option is seldom considered these days, since the
Reform Act of 1998.
If your present income has declined substantially from
the past and there is a potential you may regain it, the IRS will take that into
account in considering your OIC amount.
The IRS may require you to file an annual report and
pay in an additional amount if your income exceeds a certain level as specified
in each case.
Example:
if
your income exceeds $50,000 for the taxable year, they will require you to pay
in an additional 5% of the amount over $50,000.
So if you made $55,000 for the year, you
would pay in an additional $250 on the OIC.
The next tier may be at the next $10,000
level.
The percentage may increase to 10%.
The tiers and percentages are determined on a
case by case basis and on the merits of the case.
The total of the OIC amount paid at the
start, plus the additional payments based on future income, cannot exceed the
amount of the original tax debt plus accruals.
It’s not a boon for the IRS.
Other Articles:
(in process of updating and posting to the web. Available when there is a link.)
Necessary and Allowable Living Expenses
Annuitizing Assets to Produce Future Income
Copyright © 2001-2022 Gary W. Lundgren, EA All rights reserved.